International Comparison of Innovation Strategies in the Construction Sector / INTERBAU
Objectives and methodology
The research project compared innovation activities in the construction sector across Europe. By comparing these different development trends and innovation strategies the German construction value chain had to be positioned and benchmarks for good practice developed.
The project was implemented in three steps. In the first phase of the project, the construction value chains in 16 European countries were compared quantitatively. These country analyses provided the basis for evaluating strengths and weaknesses in the German construction value chain. In the second phase in-depth analyses were made of a further six countries – Belgium, Denmark, Finland, Great Britain, Austria and Spain. These studies contained structured expert interviews supplemented with further research based on specific literature. Case studies in Italy, Poland and Switzerland were also conducted. The comparative examination led to good practise examples appearing as adequate benchmarks for the German construction sector. These benchmarks were presented and discussed in the third phase during an expert workshop, resulting in suggestions for the German construction innovation system. The study’s results were also discussed with two further German construction experts.
With the view to making a pan-European systematic quantitative comparison connected to benchmarking the construction industry entered new territory. Similarly, the question of innovation was addressed – traditionally viewed as a weakness in this sector. Against this background the study possesses an explorative character and addresses its results and recommendations to industry associations, research and transfer organisations, educational institutions and public administrations. Dedicated recommendations for construction companies would have required a different focus.
Positioning the German Construction Value Chain
Resulting from the first project phase, the following strengths in the German construction industry were identified. In terms of the value chain, Germany has an above average proportion of industrial suppliers. Referring to technical innovation activities – measured by patents – Germany occupies the leading position in Europe. Concerning the efficiency indicators related to the construction process, Germany is in the top group. Different experiences with clusters in the construction industry are found but have so far not been systematically evaluated. The research environment for the construction industry is diverse. By promoting energy-efficient construction, Germany occupies a leading position.
This was offset by the following weaknesses. Relating to institutions relevant for the diffusion of innovation, German networks are medium to weak. Germany is below the European average concerning training activities. The platforms for communication and diffusion of innovation are decentralized and less exposed.
The following factors were not clearly classified as weaknesses or strengths. Germany occupies an average position in terms of productivity. The number of architects is above average. Despite the EU norms the level of regulation in Germany is still relatively strong. Compared with other countries, Germany has a low rate of investment and a particularly vertically integrated manufacturing sector.
Following the comparison of Germany and the six countries analysed in depth, the study presents the following results related to the underlying research questions:
- Country-specific Innovation Paths and Industrial Progress:
Although there is a trend towards a single European market with uniform standards, a substantial part of the innovation process still follows specific national innovation paths. This is more evident in medium-sized countries than in a highly federalised state like Germany or less-regulated countries as Britain or Spain. Examples are Belgium, with a high degree of industrialisation of components despite possessing a highly individual construction demand; Finland with a likewise distinctive level of standardisation and a focus on the application of information and communication technologies; or Austria, with its strong orientation to the ‘passive house’. The national innovation systems are significantly influenced by different building cultures, particular specialisations (especially in the upstream industry of building material and machine tool suppliers), and different foci on specific commodities.
- Differences in the Influence of Regulations:
Due to its complexity regulation could only be dealt with very broadly within the context of this study. General trends could be found through European standards and initiatives, such as performance-based regulation, privatisation of quality management and increasing regulation, as well as certification on energy efficiency and sustainability. But different national traditions in each field of regulation (labour market, product market, process quality, liability) remain significant, structuring the innovation processes and limiting internationalisation except for major infrastructural and industrial projects.
- Role of Energy and Resource Efficiency in the Development of the Construction Industry:
Innovative potential is most clearly seen in the increased regulations in the field of energy efficiency. Considering the changes on individual building components depending on energy efficiency, the value chain reaches a high level of innovation in terms of technical aspects. The Federal Government’s current plans for raising the energy standards of the building stock as well as the European leading market initiative for sustainable construction highlight an essential future market potential – notably in the labour market – by broadly implementing energy efficient technical innovations.
- Identification and Localisation of Innovative Actors across the Value Chain:
In most countries similar drivers of innovation could be found within companies. In addition to major international companies with their own development departments, there are also classic small company innovators within the core building sector and innovative input from architects and planners. However, it is often the specialised medium-sized enterprises of the upstream value added chain (building materials, tools, machines) that drive innovation. In this light, the reputation of the construction industry as lacking innovation has to be put into perspective. Taking the whole value chain into account, innovation – measured by patents – is recognisable, with the German construction sector taking, at least at a European level, a leading role.
- Role of the Main Construction Trade within the Innovation Process:
Barely none other sector than the main construction trade requires complex and knowledge-intensive solutions on such a regular basis. By integrating different technologies for specific local requirements, new specific challenges arise and afford innovative solutions for concrete projects. However, they are not sufficiently documented. This substantially limits their re-application and results in a central bottleneck for the diffusion of innovation.
- Process Organisation and Management within the Construction Industry:
For the main construction trade companies, process organization and management are essential for generating innovation and competitive advantage. For most construction related initiatives process innovation forms a fundamental challenge. In order to better understand construction processes direct analyses of companies or individual processes are required. The benchmarking approaches of Denmark and Great Britain reveal possibilities based on transparency, but their impact is limited whilst the implementation is controversial. Even in Finland – which promotes process innovation more continuously than any other analysed country – the experts take a matter-of-fact view of the results. Key issues for further development of the construction value chain are process optimisation and related new business models. In this regard the training of employees and their ability to cooperate in different fields, the use of new information technologies and the coordination and documentation of processes play a central role.
- Diffusion of Innovation:
The fragmentation of the value chain has always been the subject of expert discussions, although no sufficient explanation for the limited diffusion has been provided. While innovation diffusion constitutes a basis for process innovation it is still lacking in most of the countries, though in recent years experiences across diverse industries with clusters, networks, platforms or new transfer formats has also infiltrated the construction industry at various national levels. It is too early to assess these activities fully at this time.
European Benchmarks as Suggestions for Strengthening the German Construction Innovation System
The following benchmarks based on qualitative studies and complementary analyses should not be understood simply as transferable models, but rather as suggestions for strengthening the German construction innovation system.
1. The Benchmarking Centre for the Danish Construction Sector (Byggeriets Evaluerings Center, BEC) as a benchmark for stimulating optimal project implementation by transparency and comparability based on evaluation and legal requirements,
2. the British construction benchmarking operated by Constructing Excellence in the Built Environment as a benchmark promoting learning processes based on evaluation combined with regulatory data collection,
3. the public promotion of partnering in Danish construction projects as a benchmark for successful integration across the value chain including the demand side,
4. the research- and innovation-cafés of the Swiss platform ‘Zukunft Bau’ as a benchmark for a bottom-up initiated innovation promotion and
5. the Belgian building research institute (Centre Scientifique et Technique de la Construction) as a benchmark for self-organised, functional and disciplinary integrated construction research.
These benchmarks should not be understood as easily transferable models but as suggestions strengthening the innovation system of the German construction value chain. The benchmarks presented on the workshop (1, 4, 5) emphasised that a strong awareness of problems combined with a high degree of self-initiative and self-organisation within the value chain could be regarded as key (innovation) success factors.
The German publication “Innovationsstrategien am Bau im internationalen Vergleich – BMVBS-Online-Publikation 07/11, Hrsg.: BMVBS, Februar 2011, Berlin” is a result of this research project.